That 10,000 mark is a critical indicator for the markets psychologically.  I remember the day we broke the 10,000 mark for the first time and it was trumpeted as a great harbinger of the promise of America's exceptional economic future.  There's really no way to overstate these critical markers on the important indices.  This is the biggest of them all and we've gone the wrong way on it.  

The spreading sense of economic despair is precisely what we've been warning about for decades and lies of supply side, laffer-curve, starve the beast, deregulatory, Reaganomics have come home to roost.  

The nail is in the coffin and it's time to bury the lies of the market fundies.  The real question now is what will come to replace it.  That's a question that Obama can answer, but which McCain simply can't.

After the death of the Reagan Revolution, his loyal foot-soldier simply doesn't have the economic grounding to make the change we need.

It's not surprising that McCain is so out of touch when he has people like Kevin Hassett advising him.

Hassett became a laughing stock when he published a book "Dow 36,000" just before the tech bubble collapsed predicting that the Dow would shoot up to 36,000 points between 2002 to 2004.

http://en.wikipedia.org/wiki/K...

It speaks volumes about McCain's judgment that even after Hassett's prognostications were proven to be wildly wrong that he went and sought out the guy's counsel on economic matters.

traders on the NYSE will get a couple of extra uses out of those "Dow 10000" they broke out way back when when the DJIA first crossed that particular, if arbitrary, barrier.

when Obama sat on a charity's board of directors with a known (ex)terrorist? And foreigners may have contributed to Obama's campaign!!!! Never mind the accusation is false, we won't find that out until after the election, just like the lies about Kerry's SwiftBoat, that's why we waited until October to mention it publicly. On the other hand, never mind the foreign business affiliations of the lobbyist-advisors on McCain's campaign; never mind the Keating Five, that's Old News, he was never indicted; never mind the Legacy Protection Society which saved playboy/flyboy McCain's a**s from being cashiered when he behaved stupidly as a young officer. After all, that's how the system works when you're a member of the elite. Remember, however, there's all those Chicago gangsters who must have been best-buddies with the ambitious young Obama, Osama, whatever. I mean, let's get to the real gossip stuff, this election is not supposed to be about issues. Period.

The Wilshire 5000 is a much more accurate reflection of the overall equity market in the U.S.  It's down 650 at the moment.

DJIA sucks!  DJIA is made up of only 30 stocks, and it is price-weighted which makes it even more useless.  It is at best a good indicator of how IBM's stock is doing at any given time.

Oh remember those heady days earlier this year when it was $140.  It's bad day all around.  Too bad I don't own gold futures or US treasuries.

Get with the program GERMANY!  =)

It has taken a series of disasters to drive the electorate to Democrats.  This economic disaster will convince even more.  And it is sad that you can't just talk to people when times are okay and say cheap credit and lax regulation is not a good thing.  

I think the long term questions are whether the Democrats will use this power effectively and whether the public will forget all of this in a few years.

I don't think there is anything inherently wrong with cheap credit, per se. Credit should merely be priced appropriately relative to risk. This was simply impossible to do in a system where the government's central bank used monetary policy and rhetoric to create asset bubble after asset bubble as a means of fueling economic growth.

It is simply no wonder that under such circumstances, the private sector wuld simply assume that risk was non-existant, and thus fail to price credit accordingly.

Over the past several weeks, our system clearly and finally became dysfunctional, requiring the TARP program. Those who argued there was no crisis were simply wrong. Some argued aainst the TARP program on the grounds that it would simply create a new asset "bubble" and not fix any problems, but rather defer them, and in the long run make them worse. these mainly liberal economists are looking past the present crisis to a new economic system based on ... well, that part is unclear.

If you have time, here is a somewhat technical and densly written, but interesting, post about it all from Open Left:

http://www.openleft.com/showDi...

I see the matter quite differently. Faced with a crisis, we had no choice but to pass the TARP program. Simply allowing the system to fail, while superficially pleasing and cleansing, would have caused too much hardship on too many people.

What is really important is what happens next. I suspect the next step will be a coordinated, world-wide central bank interest rate cut, possibly as early as tomorrow morning, to shock the credit markets back to life like  ajolt of electricity does to a still heart.

After that, if the market is able to see in the next few days the implementation of the TARP program, it should get credit markets moving again. Sitting useless in a vault, or a mattress for that matter, is not money's natural state.

After that happens, the next step is the election.

Then, President Obama can begin to figure out how to remedy this mess.

Cheap credit is not inherently bad when justified.  But the past period of cheap credit was Fed created.  That combined with lax regulation led the financial sector to go crazy.  Individuals took part in this too (I agree with your assessment there as well).  But who wouldn't take advantage of easy money?

I certainly don't disagree with the rescue package either.  I think you can look at my comments on the subject and I (like you) was for the rescue package before it was cool.

I feel for Obama though and the next Congress.  This is one of many big, big problems to deal with.  I don't envy him or the politicians in Washington who have to come up with solutions.  As I stated in my questions above, the real test will be what Democrats do and whether the public has a lasting memory of any of this.  

As to central banks and the program's implementation, I now fear that bank consolidation will actually hinder credit market recovery.  And to my glass half empty scenario below, we could be at the point where more money is the straw that breaks the camel's back.  And instead of credit market flows, we get wealth eroding inflation.  Unless Alcoa's price cuts are indicative of a wave of deflation...  It's so complex and so simple, it's amazing how it can collapse at any moment.

So, why have a European Union if you can't agree on a common response to a common crisis.  Wie sagt man "useless" auf Deutsch?  EU.  =)

And should you update the title?  The DJIA dropped only 369.88 points.  Though at one point it was down 800.

So, I have been thinking more pessimistically lately.  Here is my glass is half empty argument for Ron1.  Maybe the industrialized world has too much debt.  The United States has a great deal of debt in every sector.  The total credit market has ballooned to $51 trillion dollars (3.6 times our current GDP).  And you thought the federal debt was a big deal (only 10% of that total).  Europe and Japan also have a big debt load.  I haven't seen figures for their total debt market, but if you look at OECD numbers for government debt it is all comparable.  And Japan has a whopping public debt.  So, all of us have borrowed this massive amount of money from future periods.  And maybe our growth has become contingent upon this borrowing.  And so even with increasing the amount of money in the credit markets, it may just have reached a breaking point at which further borrowing is not workable.  Maybe we have reached the limit at which future earnings can no longer justify this massive debt load.  This would mean we are in for a major contraction.  At what point does the debt market reach saturation?  In the U.S. we were at $45 trillion in 2006 and now we have added another all most $5 trillion in two years.  At what point is it too much?

And if all that is the case, should we bother saving money at this point?  

We were at a renewables conference watching this nightmare unfold today.  Now McCain DOESN'T want to talk about the economy!?  I am sorry, but we have a crisis and we need leadership.  No changing the subject!  Thankfully Obama won't let this economic crisis go, and is actually discussing a solution!